Episode: 23 |
Steven R Koltai:
Peace Through Entrepreneurship:



Steven R Koltai

Peace Through Entrepreneurship

Show Notes

Our guest today is Steven Koltai, the author of “Peace through Entrepreneurship: Investing in a Startup Culture for Security and Development”

Steven has had multiple careers. he has been a management consultant at McKinsey, the head of strategy at Warner Bros for ten years, and a successful entrepreneur.

His most recent career began as a senior advisor to the US Department of State under Secretary Hilary Clinton, where Steven conceived and launched the Global Entrepreneurship Program, based on the principles that joblessness leads to violence and unrest; and one of the best ways to reduce joblessness is to foster entrepreneurship in emerging markets.

After leaving the State Department, Steven has continued to advance that goal, and his consulting practice has supported entrepreneurship in over 30 countries, particularly Africa and Latin America.

We discuss

  • Advice for independent professionals interested in working in international development
  • Process of getting funding for such projects
  • Key success factors for projects to encourage entrepreneurship
  • How Steven staffs up projects in these markets
  • Some case studies, including an eight-sided box that increased revenue by 700%

For more on Steven’s work, go to www.koltai.co

One weekly email with bonus materials and summaries of each new episode:

Will Bachman: Our guest today is Steven Koltai, the author of Peace Through Entrepreneurship, Investing in a Startup Culture for Security and Development. Steven has had multiple careers. He’s been a management consultant at McKinsey and Company, been the head of strategy at Warner Bros. for 10 years, and he’s been a successful entrepreneur. 

His most recent career began as a senior advisor to the US Department of State under Secretary Hillary Clinton, where Steven conceived and launched the Global Entrepreneurship Program, based on the principle that joblessness leads to violence and unrest, and one of the best ways to reduce joblessness is to foster entrepreneurship in emerging markets. After leaving the State Department, Steven has continued to advance that goal and his consulting practice has supported entrepreneurship in over 30 countries, particularly in Africa and Latin America. 

In our conversation we discuss his advice for independent professionals interested in working in international development, the process of getting funding for such projects, key success factors for projects to encourage entrepreneurship, how Steven staffs projects in these markets, and some case studies, including an eight-sided box that increased the revenue of one firm by 700%.

For more on Steven’s work, go to koltai.co, that’s K-O-L-T-A-I-.-C-O. If you go on the About page of his site, it has links to his two recent Harvard Business Review articles and other places where he’s published work recently. I found our conversation fascinating. I hope you enjoy it as well. 

Steven, I am so appreciative of you being on the show. I’m really excited to hear about your work.

Steven Koltai: Thank you. Me too. 

Will Bachman: Fantastic. Steven, you’ve got a book that came out just last year, a recent article in the Harvard Business Review. Your book is Peace Through Entrepreneurship, Investing in a Startup Culture for Security and Development. Why don’t you tell us a little bit about your background and the work that you’re doing? 

Steven Koltai: Sure. I’m a typical example of one of these people who’s had multiple careers which actually seem at first blush quite unrelated to each other. The work that I have been doing now I’ve been doing for eight years and it is focused on developing entrepreneurship in emerging markets, particularly in fragile states. I started this work in 2009 when I joined the State Department as the first Senior Advisor for Entrepreneurship under Secretary Hillary Clinton and I built and ran a program called the Global Entrepreneurship Program, which was the sort of implementation of a major foreign policy initiative of the Obama Administration, which was embodied in a speech that President Obama gave at Cairo University in June 2009 called New Beginnings.

The central idea of my work was that, particularly with respect to American relations with the Muslim world and especially the Arab world, it was important to have things to talk about besides terrorism, and in fact one of the most important things to talk about was job creation for unemployed youth, of which the Arab world generally speaking has the highest rates in the world, and the best way to create jobs we know in the United States is through entrepreneurs and entrepreneurship development. 

So the initiative was announced to do that and I … At that time when he gave the speech and I listened to it at my home in Maine, I had retired from 30 plus years of previous work, which included some time on Wall Street, some time at McKinsey, and working as an entrepreneur in several ventures, most of which were miserable failures, but one of which was quite successful and is now a $13 billion market cap company. It’s a television satellite company based in Luxembourg called SES.

I also spent a decade at Warner Bros. as head of strategy, and then eventually headed the operating committee. But I have a background in international affairs and it was always what I was interested in, and after I retired I moved from my hometown, which is Los Angeles, to Maine. It was from Maine that I came to DC in 2009 to start doing this entrepreneurship work that I do now. 

I left the State Department. I was there three years, left and then continued to do this entrepreneurship development, and I also became a guest scholar at a think tank here in Washington, the Brookings Institution, who are the ones who published the book that you referred to.

Will Bachman: What an amazing background. Tell us a little bit about this work with the State Department and that you’ve continued since then. What are some of the barriers to entrepreneurship in fragile emerging markets and what is some of the work that you’ve been doing to help overcome those barriers? 

Steven Koltai: The book and all of my work is based on one or two very clear premises, concepts. The first is that there’s a straight line connection between joblessness and instability, political unrest, and ultimately violence. In other words, joblessness is the single biggest cause of violent conflict in the world, and it has been historically, and not just in the Muslim world, not just in today’s context of terrorism, but in the book I talk about lots of examples and lots of places, from the fact that in 1932 27% of those under 30 in Germany were unemployed, to many, many other historical examples. That’s the first premise that one has to accept, that creating jobs is the single best way to both avoid and once it occurs to prevent future violent conflict. 

The second is that of all of the … It’s certainly not the only cause of violent conflict and political unrest, and all the things that we know of, religious extremism and so forth and so on, those are all also very relevant, but most of those are not highly influenceable. Job creation is highly influenceable and there are many examples in lots of places, not least of which is the United States, of job creation through entrepreneurship. In fact, it’s what most people agree built this country. 

There’s a philosophy which I’ve developed, which is the second basic premise on which my work rests, which I call the Six Plus Six Model for Entrepreneurship Ecosystem Development. It essentially says that there’s no one thing, there’s no magic wand that you wave and poof, you have a health startup ecosystem. There’s a combination of things that must exist and it’s about an ecosystem. So the Six Plus Six Model says there are six categories of activity, identify, train, connect and sustain, fund, enable public policy, and celebrate entrepreneurs, and six categories of players, corporations, foundations, universities, NGOs, investors, and governments, who must all be involved in creating this ecosystem.

The work that I do in the field is three steps, diagnostic, looking at what a particular geography looks like in terms of its current ecosystem, using the Six Plus Six model as a mapping device. Then second is designing a program to bolster entrepreneurship, given the particular of that ecosystem and its strengths and weaknesses. The third is implementation, which is executing on hat plan. 

I have about three dozen different kinds of programs that are in the tool kit that I use, that I pull off the shelf and package in different ways or different levels of intensity depending on the geography, to actually come up with entrepreneurship development programs.

Will Bachman: Fantastic. I don’t know how confidential the work is, but could you walk us through a case example and sanitize it if necessary, or if you can share the details of the geography? I would love to hear how that played out in a particular case example. 

Steven Koltai: Sure. I’ve worked in over 30 countries so far. When I was at the State Department, which is where I first developed this whole sort of philosophy of how you do this, I’ve tweaked it and grown it since then, but the basics started then. I worked in eight countries. There were three countries in which we had sort of full-blown programs, meaning an office with full staff and at least monthly, if not weekly programs. 

In order of rollout, those were Egypt, Indonesia and Turkey. Egypt, by the way, we started just a couple weeks before the Arab Spring Tahrir Square demonstrations there and then continued through and beyond the events there. Then there were five secondary countries, Lebanon, Jordan, Algeria, Tunisia and Morocco. 

All of those are places where I had worked. Since leaving State five years ago, most of my work has been in Latin America and the Caribbean and Sub-Saharian Africa. Right now Sub-Saharian Africa is where I’m doing most of my work, but frankly it really follows where the clients are, and we can talk about clients. 

If we just take one of those countries as a example, Egypt … At the time that we started our program there in 2010 we did exactly as I described. We did a mapping exercise, looking at the ecosystem there. By the way, on my website, koltai.co, there is a case study for work that I did in Ghana, which is after I left State, but I worked quite a bit in Ghana, and it actually has one of the … It has the one-pager diagnostic map that shows the Ghanaian ecosystem and how we mapped it at that time all on one page using the Six Plus Six model. 

We look at where there are existing strengths and weaknesses. For instance, in the pillar of connect and sustain one of the key examples of programs there are business incubators or accelerators. We looked at how many of those are there and where are they and are they university affiliated, are they related to a state or provincial government doing it for economic development reasons, are they related to a venture capital firm or another investment group that wants to turbo-charge their own portfolio of companies. 

There are lots of different ways that the incubators and accelerators arise, so you have to analyze them on a very specific geographic basis. It’s always unique, even though they fall into broad categories that are the same everywhere in the world. 

Then you say okay, how are they doing? Are their applicant pools and their cohorts full? Are they graduating startups that have been able to get funded and get traction in other ways that we measure it? To the extent that the answer is it could be better, which is usually the answer, there are specific things you can do. You can do incubator management training programs, where you actually work with the managers of the incubator. 

You can look at the ways in which they program, and particularly looking at some of the other key elements of my own philosophy, mentor, because I believe mentoring is one of the most important things. What kind of mentoring programs do they have? Who are the mentors that they get? How do they get them? Where do they get them? Are they compensated or not compensated? How seriously do they get involved with their mentee companies?

The diagnostic leads you to the design of a program to then improve these things. In the case of Ghana … In the Egyptian case the result of this work was a very robust program in Egypt, dozens of specific activities, including bolstering the incubator and training programs and entrepreneurship delegations. One of my favorites is entrepreneurship journalism training, where we actually find that entrepreneurs in developing countries usually don’t have much support and don’t think it can be done here, wherever here is, because of its unique characteristics. One of the best ways to change people’s minds about that is to cover the stories of entrepreneurs who are actually doing it in that country. 

One of the programs I run is having journalists, local journalists, trained by those either from the US or Europe who cover startups to teach journalists how to find them, how to cover them, and the result is increased heat and light on local entrepreneurs, which often inspire others to start.

Will Bachman: That’s awesome. When you see someone, a neighbor or someone in your neighborhood, creating a business you realize it’s possible. That’s very cool.

Steven Koltai: Right. Exactly. 

Will Bachman: Could you talk a little bit about how you recruit your teams? I imagine when you go into a country you may … I don’t know if you bring some talent from your firm that works across countries, but I imagine you may also be recruiting some local talent. How do you recruit team members and how do you train them in your methodology? 

Steven Koltai: You’re hitting on a really element of sort of my business operation. There are a few things I have learned. One is I have quite a large network of resources and I’m always looking to expand it. For instance, I have a database of people who are interested in mentoring. You can go to my website, fill in a form, it takes about three minutes, and then you’re in the database. Mentoring is most often done remotely via Skype. I have been doing this now for many years and have a very good network of those sorts of people. 

The same is true with people who I hire on a project basis. All of the teams I work with are custom made. They’re specific to the geography that I’m working in, and I am always hiring people for specific projects. I don’t hire people … They’re all contract 1099 consultants, and I don’t hire people generally. I only hire them specifically for a consulting engagement, with the except of two or three people who, as you mentioned, work with me regularly and everywhere, including in preparing bids and proposals for future work, which is very important. 

In everything I do, I hire the teams specifically. What I have found is that the most important … It depends on what we’re talking about, but generally my number one criteria that I’m looking for is not so much subject matter expertise in what I do, which is something I can impart relatively easily, but it’s the kinds of skills that people get after they’ve had experience in a major consulting firm for example. 

I also find, by the way, that journalists or former journalists are another source of talent who have the kinds of skills that I need and use. Because while there are certain common principles, the ones I described in the Six Plus Six model, everywhere I work, at the same time every situation is unique, the players are unique, and so you have to have the analytical skills, and particularly frankly the organizational skills, including project management writing as probably the single most important actual measurable skill.

Very often I will ask to see … Not very often, always I will ask to see a writing sample even before a resume for somebody who I’m looking to hire. In my work, languages and cultural familiarity are really important. If you’ve never worked in a developing country, not necessarily the one that is the case in point, but if you’ve never worked anywhere in the developing world, it’s going to be very tough for you to do the sort of heavy lifting we have to do, because you’re going to spend most of your time being amazed that this is what life is like. Those are some of sort of the ways I work with people.

Will Bachman: That’s so insightful. I can imagine it’s quite challenging to interview and recruit and assess someone’s background and bio in such a diverse set of geographies. I image that one of the key aspects of actually driving impact with the kind of work you do is aligning a set of powerful interests in the countries where you’re working, government, industry leaders, powerful political figures. Can you talk to me a little bit about how your firm supports that effort of once you have the recommendations and you’re done with kind of the diagnostic and the design phase in order to implement, how do you go about building alignment on the recommendations? 

Steven Koltai: You’re absolutely right that having what I call a champion in the local geography is really important. By the way, the local geography … Entrepreneurship ecosystem development is actually hyper-local. For example, I always say the ecosystem of Boston is totally different than the ecosystem of my adopted home state of Maine, even though they’re relatively close to each other. You can’t talk about America, and you can’t even talk about New England, and you can’t even talk about coastal New England. You have to talk about Maine, and within Maine the area around Portland is very different from the rest of Maine, which by the way is as big as the rest of New England put together in area.

It’s hyper-local, which means that the political support and the industry support that you need has to also be local as well as national. I have learned the hard way that if you cannot quickly and easily identify a government champion who is supportive of increasing startup activity, you are almost guaranteed to fail. It’s extremely rare that you can be successful without that key element. 

Having other constituencies is important, but counterintuitively … One of the questions I so often get on the lecture circuit, and I do a lot of public speaking particularly related to the launch of the book, one of the most frequent questions is you’re talking about a private sector solution for development. Why on earth would you want to get the government, which is almost always corrupt in a developing country, involved?

The answer is you’re right, it is almost always corrupt, and by the way, corruption is the single biggest impediment to entrepreneurship activity in the developing world, but it’s indispensable. If you don’t have government, at least one person who can identify as the champion … It can be the minster of education, the minister of economy, sometimes the S&T, sometimes IT, if you’re really lucky the prime minister, but there has to be some senior government leader that is supportive of this, because otherwise you’re building sort of the sandcastle at high tide. 

Some of the clients I have, of which the largest is the World Bank, you can get your client in that case, i.e. the funder, to help hopefully with some of the political blocking and tackling, but not always, and where it doesn’t work I’ve learned you are very unlikely to be successful. 

Will Bachman: You mentioned kind of the World Bank and the funder as well as the individual government clients. Could you talk a little bit about for this kind of work, this international development work, could you talk about who the clients are, who the funders are, what the proposal process looks like? Is it proactive that you’re calling on the prime minister of a country or are they reaching out to you? I’m interested in how the projects come about. 

Steven Koltai: This is what I spend most of my time working on, this very issue. The fact of the matter is that there are relatively few check writers who are interested in supporting this kind of work. There are an awful lot of people, a lot of people, who talk about it and who recognize its importance. Almost every political leader … I like to say that whether you’re on the far right, the far left, or in the middle as a political leader you’re going to support entrepreneurship, because the last thing that you want is a whole bunch of unemployed young people storming the palace. 

Everyone, dictators, despots, democratic leaders or anarchists basically, everyone supports job creation through entrepreneurship. That’s not the hard part. The hard part is finding the people who are prepared to pay for it and prepared to actually put their back into it. There are very few of those. 

The principle funders for this kind of work so far have been official development agencies like the World Bank, like USAID, and its counterparts around the world. The book that I wrote, which comes out of my experience with the State Department, is extremely critical of the State Department, and specifically USAID. I describe them as trying to turn a screw with a rubber screwdriver. The procurement and contracting processes through which they hire people to do this work are at this point so broken that they actually no longer work, and as a result I don’t bid for USAID funds at work myself, even though I came from out of that world. 

I do work for other development agencies who are the equivalent of USAID, like [inaudible 00:24:29] in the UK, which is a very good agency, or at least it has been, and then the development institutions, multi-laterals, like the World Bank, [inaudible 00:24:42] Development Bank, et cetera. But all of that together is a tiny … The largest category of clients for this work, but it’s a tiny, tiny drop in the bucket of what’s required. 

Most of my time now is spent evangelizing and talking to people like sovereign wealth funds, institutional investors, corporates who are looking to grow a sector, for instance the internet in Africa, which is where the largest growth in web based businesses will occur, and saying to them you have a personal vested interest in increasing the deal flow, in increasing the activity of entrepreneurs in this particular geography because, fill in the blank, you won’t have companies to invest in, you won’t have companies to sell to, you won’t have companies to partner with, you won’t have companies to acquire, unless this happens. 

I spend a lot of my time and effort writing about this. The Harvard Business Review article, I’ve actually written several. There’s one that I wrote recently about the importance of entrepreneurship in solving the migrant crisis in Europe, the biggest crisis arguably confronting the European Union, and this affects everybody. This affects corporations. This affects banks. This affects B2C businesses. They ought to be trying to figure out how to maximize the benefit of millions of newcomers in their economies, of which the largest is Germany.

Will Bachman: I’ll mention that a link to I think most of your HBR articles is on your website, right? That’s Koltai, K-O-L-T-A-I-.-C-O. So there’s a list if you want to follow up and read those articles. Could you talk a little bit about any projects of which you’re particularly proud, where you can talk about some of the impacts that you’ve seen from this kind of work?

Steven Koltai: Absolutely, and there are plenty of not such great stories, but there are some very exciting stories as well. The first thing I want to say is never is the work that I do the only thing that moved the needle. I want to be right up front in saying any of the examples I talk about, it’s impossible for anyone to ever say that that was the thing that changed the equation. 

Having said that, I really do believe that in the Arab world broadly, but specifically in Egypt, in Jordan, in Tunisia, in Lebanon, when I look at the level of activity in the startup sector today versus eight years ago, it’s breathtaking. It’s still a tiny, tiny, tiny fraction of what it has to be in order to absorb the enormous population increases, particularly in Egypt, which is the most populous Arab country and by far the fastest growing.

When you look at what exists today … I mean for instance today Flexus Labs, which is an amazing institution incubator that started in Cairo, founded by an Egyptian-American that we were involved in helping a little bit when I was at the State Department, that entity has now spread to three other countries and also has a sidecar venture fund. When you look at the author of one of the best books on this, Chris Schroeder, who wrote Startup Rising, which is about the development of the Arab world, got into that whole business having participated in our program at the State Department, he came on one of the first entrepreneurship delegations I organized, which was to Egypt, and that was his first exposure to this, and then he went on to not only write a fantastic book about it, but has become a well-known international speaker on the subject, again further raising the visibility. I would say that I feel like I played a small part in that turnaround. 

There are many other economies as well. I didn’t personally do the work. I studied the work, but Rwanda has been one of the greatest success stories in the world. It is the most decimated country arguably in modern history after the genocide which ended in ’93. In the 20 plus years since then it has had the fasted economic growth in Sub-Saharian Africa. It’s quadrupled it’s per capita income. Kigali has citywide wifi, and I would argue that it is because entrepreneurship promotion was at the center of the government’s economic plan that much of this progress was made. There are good stories in lots of places where it’s been successful. 

Will Bachman: That story about Rwanda is inspiring. For an independent professional listening to this show who has an interest in international development and was not a senior advisor to the State Department perhaps earlier in his or her career, what are some ways for independent professionals to position themselves and get involved in project work in international development?

Steven Koltai: There are lots of ways and it’s a big field. As I said, I’m actually trying to make it a bigger field by getting more people to support it. But just to list a few of the resources, the old school established way that this works is development institutions issue RFPs for projects all over the world. That’s been going on for 50 years, and it’s still the single biggest way that works. These RFPs are published by each individual, but they’re also aggregated in a few sites. 

Some of the best sites are DEVEX, D-E-V-E-X, the United Nations has also a DEV business site. These are like any kind of government contracting sites. These are where these opportunities are published. In the case of DEVEX, there’s also a job board that goes with it, so those are two places I would suggest. 

Another is an organization called the Aspen Network of Development Entrepreneurs, whose website is A-N-D-E-.-org. It is a membership association, a trade association of consultants and contractors who work in this space, so there’s a listing of all of its members, and there are at this point over 200 members. Most of those are hotlinks, so you can check out any of them individually. There is also a job board on that site where people are advertising.

Then there are a lot of people like me, who are individual independent contractors, or in my case subcontractors. I’m a very small, boutique subcontractor and I only do entrepreneurship development, but there are several much larger firms from Boos, to Deloitte, to Price Waterhouse Cooper, to EAI, Nathan Associates, AFT Associates, and those are just the Americans. You have a whole bunch of Europeans also in this space, Adam Smith International, [inaudible 00:32:44] International, all of whom do this kind of development work, and all of whom are constantly, perpetually hiring contract consultants. 

There actually are lots of ways to get involved. What there aren’t, unfortunately, are enough funders funding the work, and that’s why I spend my time trying to make the argument, and it’s why I’m always looking for speaking engagements in front of potential funders, corporate groups, foundation groups, investors groups, to explain the importance of this work in the hopes that they will then start funding more of it.

Will Bachman: Great list of resources. I’ll also throw in a shout out for the Ashoka Foundation. A number of Umbrex members have I know volunteered to mentor Ashoka fellows through the Globalizer Program, working with social entrepreneurs around the world. 

Steven Koltai: Absolutely. 

Will Bachman: In addition to those firms you mentioned, any book recommendations that you have for someone who’s interested that you think are particularly well done, beyond your own book of course, on learning about entrepreneurship in emerging markets? 

Steven Koltai: At the back of my book there’s quite a long bibliography, so I won’t repeat all of that, but that’s definitely one place to go for this. There are several organizations, particularly university affiliated organizations, that work in this space. The Center for International Development at the Harvard Kennedy School, where I’ve done some lecturing, the Legatum Center at MIT. I’m actually teaching a course based on my book and my work at Tufts, my alma mater, next semester. 

It doesn’t take more than about 15 seconds to Google search some of the key sources in the international entrepreneurship space. Some of the biggest publishers of research here, Endeavor Insights, which is affiliated with the Endeavor Organization, which is a first-rate international entrepreneurship development at NGO, is another place. Other universities that have programs, the William Davidson Institute at the University of Michigan is focused exclusively on this area. I mean the one thing that exists in abundance is research and literature. Where there’s a lack is programmatic money. 

Will Bachman: In his recent book, The Complacent Class, Tyler Cowen, who also runs the blog Marginal Revolution, has some figures that were surprising to me, which are that according to his numbers entrepreneurship in the United States is actually down now compared to the 1970s. You hear so much about Silicon Valley, but his numbers are that the number of startup per capita, the number of people working in firms that were started recently is down since 1970. 

Number one, do you agree that’s true. Number two, on your sort of Six Plus Six model how do you evaluate the United States today? What changes could happen in the US to foster more entrepreneurship? 

Steven Koltai: First, yes, I totally agree with the data, and it has been reported in lots of other places, including the Kauffman Foundation, which is another great research source. It’s the largest funder of entrepreneurship programming and research in the country, K-A-U-F-F-M-A-N, based in Kansas City. 

So yes, the numbers are right. A couple of reactions. One, again entrepreneurship is hyper-local. If you look at the United States you’re going to get … Sort of like the blind man and the elephant, you’re going to get one picture. If you were to look at specific geographies you would get a very different picture, particularly … And this is really important in the work that I do. I spend as much time in what I call no tech and low tech entrepreneurship promotion as high tech. 

In the US we tend to think of entrepreneurship and Silicon Valley. We tend to think of tech. But in fact non tech businesses if you’re looking for job creation actually have a tradition, a history of creating many more jobs. I always say jokingly more people work for Starbucks in the San Francisco Bay Area than work for Google worldwide, and Starbucks did not invent coffee. Starbucks was the kind of second class of entrepreneur that I talked about, or second category I should say, which is process innovators, not product innovators. 

In the developing world more often than not you have process innovators who are working in non tech or low tech areas, so you have to be more nuanced in how you assess the issue than just looking at nanotechnology startups in Silicon Valley and saying okay, that’s down. 

The second thing is that obviously, as with everything, ecosystems age and at different places at different times they have very different problems. The problems of aging baby boomers are very different than the problems of millennials. The problems of the United States, or to be more extreme Japan, which is the oldest OECD country developed economy, it has a real problem with its own entrepreneurship ecosystem, are yes, they need further entrepreneurship development, but their issues and the solutions to their issues are very different than what you would be doing in Ghana or Egypt. 

You really do have to look … You have to parse this and look at it with a much finer lens to make sense of what’s going on in a particular economy. In the United States there are places, like Detroit, like the Lehigh Valley in Pennsylvania, like central Florida, where there are extraordinary, active, positive, strong ecosystems developing. Those are young and new ecosystems, as opposed to Boston or San Francisco or Austin or some of the others, so you have to be very specific hyper-local. 

Will Bachman: You mentioned kind of low tech and non tech entrepreneurs. Any specific entrepreneurs come to mind as examples you’d like to share from the 30 plus countries that you’ve worked in? Any particular companies that come to mind that you thought were particularly impressive or exciting?

Steven Koltai: I have legions of them. I’ll tell just two. Both of them are in Indonesia, which was the second biggest country, or the second big country that I worked in when I was at State, and both of them are what I would call no tech or low tech. One was a company that was in the cut flowers business. They were in rural eastern Java and they were … Ginger flowers grow wild in Indonesia, which is the most fertile country on Earth, by the way. Yet that ginger flower, when you buy it in Seoul, Korea, is $50 a stem at retail. 

This guy was having a problem because he could sell his product, which were exotic tropical flowers, as far north as Hong Kong, which is about a six hour, seven hour flight, but he couldn’t sell them as far north as Seoul or Tokyo. In Hong Kong the ginger flower sold for about $7, but in Seoul it sold for $50. The problem in getting it to Seoul is that in order to get that high value price it has to be completely flawless, it has to be perfect. The Lufta Hotel in Seoul is only going to pay you the $50 if it is flawless, and he couldn’t get it there. 

We ended up working on a new kind of packaging solution, which was an octagonal cardboard box. Brought in an expert in perishable and fragile produce, the packaging, bananas, kiwis and strawberries, and came up with a new design which, parenthetically, also fit exactly the specifications of a larger air cargo container, which allowed the product to be put on a plane to go to Seoul, so it increased his sales in the first year 10 times. 

The effect of that on the villages that lived around him and harvested … I won’t even say cultivated, because many of these were wild, but harvested the orchids and the ginger and these exotic flowers was immediate and breathtaking. So that’s one example. 

The other example, in the city of Jakarta, which is, as with all developing country major cities, a nightmare from a traffic standpoint, you literally cannot move, there was a low tech solution which was kind of a Uber idea, but it was using scooters instead of cars, and they delivered products as well as people. The company was called Go Jet. I took an entrepreneurship delegation there in 2011 and they were pitching for $250 thousand of seed funding. We had several people in the delegation that made $25 thousand and $50 thousand investments. They did end raising their $250 thousand. About six months ago, maybe a little more now, a Chinese company invested $540 million based on a $1.2 billion valuation of this company. 

One of the points I make to people is do well by doing good, or do good by doing well. This is the big difference I have with some of the “social” entrepreneurship programs. These are tiny, tiny, tiny amounts of money to [inaudible 00:43:58] Fund or even Ashoka. Tiny, infinitesimal amounts of money compared to what you can do when you show people that there really is not only a financial return, but also a social return. Both of the examples I mentioned are great businesses and investors would have substantial returns if they invested in them. 

Will Bachman: Wow, that’s incredible. Who would think that the package designer could be such a transformative offering, but going from $7 to $50 is pretty impressive for a box with eight sides. Wow. Steven, this has been an incredible discussion, so inspiring the work that you’re doing to foster business around the world, which reduces joblessness, which reduces violence. Thank you so much for joining.

Steven Koltai: Thanks for having me.       

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